Supermarket sweep: Morrisons taken private
Last weekend’s auction proved ‘strangely underwhelming’
After an intense four-month battle, “we were expecting the mother of all food fights” at last weekend’s auction for Morrisons, said Ben Marlow in The Daily Telegraph. It proved “strangely underwhelming”. Clayton, Dubilier & Rice (CD&R) beat its US private-equity rival Fortress by “just 1p-a-share” – buying Britain’s fourth-largest supermarket for around £10bn (including £3bn in debt). It’s a triumph for former Tesco chief Sir Terry Leahy, who is tipped to return to a British grocer a decade on as Morrisons’ new chairman. But the outcome for other stakeholders looks less rosy. Morrisons’ debt “will more than double” just as a supply crisis is swamping the country, placing CD&R “under intense pressure” to give the supermarket “the full private-equity treatment”.
In fairness, CD&R does enjoy a better reputation “as a builder of companies” than most of its peers, said Nils Pratley in The Guardian. But this is “still a leveraged buyout that relies on debt gymnastics”. Ominously, its “behavioural pledges” – covering asset disposals, staff pay and treatment of suppliers – are “vague” and last for only 12 months.
Given the hard work needed “to justify this deal”, loser Fortress might even be feeling “a little relieved”, said Lex in the FT. Still, the price paid for Morrisons – a “chunky” 61% premium on its “undisturbed” share price – “highlights the frenzied interest in Britain’s supermarket sector”, said Oscar Williams-Grut in the London Evening Standard.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Morrisons follows Asda as the second big grocer to fall into private equity hands this year. Who’s next? Shares in Sainsbury’s, Ocado and Tesco have surged amid speculation they might also be targeted. Tesco’s near £20bn market cap was once thought to be insurmountable, but “in the current climate”, rule nothing out.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
-
'Republicans want to silence Israel's opponents'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Poland, Germany nab alleged anti-Ukraine spies
Speed Read A man was arrested over a supposed Russian plot to kill Ukrainian President Zelenskyy
By Peter Weber, The Week US Published
-
Today's political cartoons - April 19, 2024
Cartoons Friday's cartoons - priority delivery, USPS on fire, and more
By The Week US Published
-
Shein: could the year’s mega-IPO fall apart at the seams?
Talking Point Latest hitch is a pre-float 'security review' that could deter potential investors
By The Week UK Published
-
Labor market strong as inflation sinks
Feature And more of the week's best financial insight
By The Week US Published
-
Midair blowout: another black mark for Boeing
Feature This isn't the first production issue Boeing has encountered
By The Week US Published
-
Behemoths of the seas
The Explainer Cruise liners keep getting bigger, with the world’s largest 'megaship' ever built set to make its maiden voyage this month.
By The Week Staff Published
-
Holiday season: Fed optimism cheers investors
Feature The feds believe their 'pivot' will make a recession unlikely
By The Week US Published
-
Older workers stay in the labor force
Feature And more of the week's best financial insight
By The Week Staff Published
-
America's most in-demand job
Feature And more of the week's best financial insight
By The Week US Published
-
Currency: the long reign of the mighty dollar
Feature Argentina is planning to drop the peso in favor of the US dollar
By The Week US Published